The challenge Barack Obama faces is being compared with that of Franklin Delano Roosevelt during the 1933 depression and of Abraham Lincoln at the start of the civil war. Another analogy suggests itself, with Mikhail Gorbachev's perestroika. Then, in 1985, the USSR was at war, its economy stagnant, and the promise of the Communist dream sounded increasingly hollow. Now the U.S. is fighting two wars: one raging in the same hostile terrain of Afghanistan which saw the undoing of Soviet expansion, the other in Iraq. Begun under false pretext and in defiance of our key allies, it was said to aim at democratizing Iraq, but instead spurred religious and ethnic violence.

The enormous financial burden of the two wars-Joseph Stiglitz estimates it at $3 trillion--heavily contributed to the financial meltdown in the U.S.A. and disarray in global economy. Far from being a model for developing world, we now need to heal our own economy. Now it is America's turn to embark on overhauling its financial system, re-structuring its economy, re-inventing a more equitable government, re-examining its foreign strategy and re-thinking its basic assumptions about the world. In short, it is time for perestroika, American style. Call it transformation, as Obama does. But it must be done much better than Gorbachev's perestroika least the U.S.A. goes the way of the USSR.

It cannot be done without thinking out of the box of the Cold War mentality. But, as the war in Georgia has shown, this approach continues to poison U.S.-Russian relations.

The Russian rebuff to Georgia came after its repeated warnings against NATO expansion, after the bombing of Yugoslavia and the proclamation of Kosovo's independence. But it was Russia that was accused of reverting to the Soviet era Brezhnev doctrine. In fact, in his reckless attack on South Ossetia, Georgia's president Mikheil Saakashvili was inspired by U.S. abandonment, in the post-Communist era, of the strategy of peaceful resolution of conflicts in favor of the "shock and awe" bombardment of non-co-operative adversaries. This strategy has proved not only inhumane but also counter-productive.

Unless President-Elect Obama renounces this reliance on war as a means to achieve security for the United States and its allies, there is little chance that his presidency will produce a better world than the one President Bush left behind. It is incumbent upon European leaders, especially, those who refused to support U.S. in Iraq, to speak up and dissuade U.S. leaders from starting a new war and using bombing as the peace-maker of choice.

Let me now focus on the need to transform U.S. policy toward Russia. First of all, U.S. should abandon the fantasy of unipolar world domination foisted on the Bush administration by the neo-conservatives. Alas, many of our European allies were cajoled into accepting, however half-heartedly, U.S. hubris. Nowwe need to scale down U.S. and NATO military involvement abroad and rely on skilled diplomacy and leadership by example, not brute force or economic blackmail. We need to recognize that even though the U.S. is the only superpower, it is far from omnipotent. We need allies and partners, and that includes Russia.

We also need to recognize that many of our current problems with Russia are of our own making. Our failure to do good on the promise to disband NATO is one example. Our expansion of NATO to Russian borders is another. The decision to install an anti-missile "shield" in Poland and the Czech Republic is bound to cause more tensions.

Imposing the free market

We made mistakes even while helping post-communist Russia in its economic reform. In the 1990s, U.S. adopted an approach, espoused by Jeffrey Sachs, Andrei Shleifer, and Lawrence Summers, which amounted to clumsy efforts to impose on Russia the same free-market dogmatism that is at the root of today's global crisis. Under the misleading name of the "Washington consensus" this approach to globalizing Russia dominated the Clinton administration. Yet even in the World Bank there were prominent critics whose advice was ignored.

One was Joseph Stiglitz who challenged the orthodoxy of free-market fundamentalism with an alternative economic philosophy he called "a third way." Cognizant of the benefits of free-market, he has also recognized the important role governments can play in preventing its abuse by tycoon investors and mighty corporations. Stiglitz was squeezed out of the bank because of his views, even while being awarded the Nobel Prize in economics. Another critic was professor William Easterly who later authored the book with the meaningful title The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Free-market Healer, Heal Thyself

While lecturing Russia about the blessings of unfettered free market, we forgot the lessons taught us by Thomas Jefferson . In a letter to John Taylor in 1816, he warned that the "banking establishments," when left to their own devices, " are more dangerous than standing armies." Presciently, he foreswore "the principle of spending money to be paid by posterity" as "swindling futurity on a large scale." Jefferson knew that in a democracy the people, through its government, should have regulatory power over irresponsible bankers and investors. As the Bernard Madoff scandal has shown once again there are plenty of those ready to take the country for another Ponzi pyramid ride.

Not only did we fail to control our own banks, but we prescribed to Russia "shock therapy" that resulted in the establishment of the Seven Banks Misrule (Semibankirshchina -Семибанкирщина). In the mid 1990s they vied for the power with the Russian state. Thus, our meddling in Russia contributed to the rise of oligarchy and ascendancy of crooks and murderers. Only with the advent of Vladimir Putin to power in 1999, wrote the heroic Paul Klebnikov in his book Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia, did the government's "newfound zeal in going after crooks and criminals" begin to pay off. Klebnikov was murdered in Moscow in 2004, shortly after he was made the editor of Forbes Russia.

U.S.-sponsored "shock therapy" also resulted in untold suffering for the Russian people. It destroyed the universal health care system which Obama now promises to introduce in the States. The very notions of privatization, democratization, and globalization were discredited in the mind of the Russians who came to associate them with the "tricky" America. A huge cultural disconnect between the American givers and Russian receivers was inevitable due to the closed nature of Soviet society.

But on occasion this amounted to more than a disconnect. After all, the Harvard Institute of International Development allegedly received a federal grant for U.S. foreign policy considerations, as Janine Wedel has revealed. Her research exposed how Harvard's "best and brightest colluded with a Russian clan to create a system of tycoon capitalism that will plague the Russian people for decades." Harvard's grant for ‘foreign policy considerations' was not only given without open bidding-and thus in violation of free-market's rules. In its execution there were serious violations of U.S. law, with the result that Harvard was forced to repay the government the largest penalty in its history.

Meanwhile, Russia's economic conditions improved enough to make dependence on foreign loans unnecessary. Soon the Putin government managed to undo most harmful aspects of misbegotten reforms by curbing the power of the oligarchy and restoring the Russian state's sovereignty and prestige domestically and overseas. [1]

Alfred Kokh, a deputy prime minister in Boris Yeltsin's government, recalls that U.S. officials were so heavy-handed in dealing with Yeltsin that he "was perceived (by the Russian people) as a puppet of the West, his policies dictated by the US." No wonder that in the years to follow, the Putin government's efforts to assert Russian national interests vis-à-vis the U.S. have met with the overwhelming approval of the Russian people.

Changing the Cold War stereotypes

These Russian observations are echoed by a number of Americans. Suzanne Massie, a former adviser to President Reagan, condemned the Cold War era stereotypes that pervaded the U.S. approach to Russia during the post-Communist period and flared up again during the Georgian war. "For the past eight years there has been a rising chorus of Russia bashing, growing ever more strident. We seem to have fallen into seeing Russia exclusively as aggressor and expansive. We need to get over these stereotypes in a hurry."

Two former Secretaries of State, Henry Kissinger and George Shultz, likewise deplored Russia-bashing and argued against the policy of isolating Russia, which such neocons, as John Bolton, have advocated in retaliation for Russia's alleged aggression in Georgia. "It is neither feasible nor desirable to isolate a country spanning one-eighth of the earth's surface, adjoining Europe, Asia and the Middle East, and possessing a stockpile of nuclear weapons comparable to that of the United States."

Across the ocean, Sir Roderic Lyne, a former UK ambassador to Moscow, offered similar advice on openDemocracy Russia, but for different reasons: "Isolation would consolidate power in the hands of the most unreconstructed elements in Russia; deprive the West of leverage; create a pressure-cooker in a huge and heavily-armed country; and drive us ever further away from the goal of a stable and cooperative relationship with Russia." Sir Roderic chose reasonable terms for a wide-ranging Russia-and-the-West debate that has been sorely missing in the mainstream media.

Russian responses to Sir Roderic were encouraging. Fyodor Lukyanov challenged the political elites, East and West, to transcend their national bias in favor of a broader global perspective. Alexei Arbatov suggested that Russia's "Military force [in the Caucasus] was used to great effect," but "now we should build on the new respect for Russia by acting with reasonable restraint and adopting a flexible and constructive diplomatic line towards the West."

Lilia Shevtsova was not so sanguine. She criticized her Russian colleagues: "Essentially, our authors, in offering us a Russian version of Realpolitik, are trying to prove to the West and to Russia that there is a need for new international rules of play. This means rules which would allow today's Russia with its corrupt authorities and ‘petrol' economy to survive and reproduce itself in comfort. And this would be tantamount to protecting Russia's "anti-liberal and anti-Western system."

Alas, Shevtsova applied her "liberal view" to Russia only, failing to consider a similar correlation between foreign and domestic policy in Western countries. Did she not hear that after the 9-11 attack Bush tried to rally the West to a "crusade" against Al-Qaida by proclaiming the Stalinesque motto that ‘those who are not with us, are against us'? Does she not know that, on Bush's initiative, The Patriot Act was then passed which has restricted civil liberties in the United States more than during the Cold War when our adversaries were not only considerably more powerful than Al Qaida, but also had much a large following inside the United States?

Scholars advising their governments on international relations must be watchful of the dynamic correlation between foreign and domestic policy even in the most democratic countries. Ancient Greeks knew that any form of government, including democracy, has a tendency to degenerate. We, too, know that the eternal vigilance against enemies of freedom, both foreign and domestic, is the price we have to pay for the blessings of liberty. As Shevtsova seems oblivious of Western concerns with the preservation of liberty , one would doubt her credentials as a "liberal." Her views seem more consistent with those of the neo conservatives.

Neo-con's Media Megaphones

Now the neo-conservatives seem to be re-grouping to take charge of U.S. foreign policy under Obama. In fact, several neo-con columnists were elated by Obama's appointments. This makes the liberals worry whether Obama will be able to carry out the transformation he promised. Teresa Stack, president of The Nation magazine, the flagship of the liberal-left movement that voted solidly for Obama, reminds its readers: "Neocons and their corporate mainstream media megaphone are prepared to do everything in their power to thwart progressive change. We can't afford to take change for granted."

Indeed, it was the "mainstream media megaphones" that fanned hysterical russophobia during the Georgian-Russian conflict. They regurgitated comparisons of the Russian action to Soviet invasion of Czechoslovakia in 1968 and Hitler's annexation of the Sudetenland in 1938. They also largely marginalized scholars like Mark Almond, a British historian, who found Russia's rebuff to Georgia fully legitimate. With greater justification, he compared the Russian action with Britain's retaliation gave to Argentine aggression in the Falklands in 1982. No great power will retreat forever, he quoted Kissinger. Indeed, after two decades of endless retreats under constant pressure from the West, Russia finally decided it can no longer retreat and hit back.

But hitting back is not a strategy. Neither is U.S. mass media hysteria. That's why Russia, the EU and the United States need to address the common concern for the prevention of armed conflicts along the Russian borders and elsewhere in the world, least they escalate into a major conflagration involving nuclear powers.

Hold Obama to his Promise

Now that Obama is about to be inaugurated, it is important to remind him of the transformation he promised to deliver. It has to be toward a more efficient, fair, and vibrant society at home and a less confrontational, less expensive, but more prudent and cooperative U.S. policy abroad.

The new policy toward Russia must include:

Abandoning the fantasy of U.S. unipolar world domination and recognizing Russia's legitimate national security concerns;

Abiding by international law and work within the established organizations such as the U.N., EU, OSCE, WTO, World Bank and IMF until they can be revamped to conform to the new reality;

Returning to negotiations with Russia on all Cold War legacy issues, such as America's abrogation of the Anti-Ballistic Missile Treaty and Russia's repudiation of START II;

Halting NATO expansion into Georgia and Ukraine or, at least, provide a ten years moratorium on such expansion;

Cooperating with Russia in halting proliferation of nuclear weapons;

Coordinating efforts against international piracy and terrorism, as well as against global warming and to protect the Earth's biosphere.

The New York Times described the election of Obama as a catharsis and return to the American dream that was destroyed--politically, economically and socially--under Bush. Obama's new appointments bear little signs of new thinking. They may be pragmatic in the sense of party politics, but lack a vision of the evolving global community and the role the United States and the West should play in it.As Gorbachev's perestroika showed, any attempt at radical transformation is risky. It's better to have the Russians among our cheer leaders and friends, not as our opponents or detractors.